Nepali Times: You have been in Nepal for more than 10 years, what have been your main achievements? TK Gupta: We began company registration in 1989 because the Himalaya is a storehouse of herbs and medicinal plants and also because there was a local market for our products. We wanted to sell about Rs 80 million worth of products and collect medicinal plants and herbs. I came here first in February 1991 and found that we were selling Rs 8-9 million worth of goods a year. I was passing through Asan and saw Dabur products on the footpath, selling at double our price. I told management that our market here was higher than that reflected.
We began trading in May 1991. In February 1992 we realised the market was picking up and by November 1992 our factory had begun producing. In December 1992 the then Prime Minister PV Narashima Rao visited Nepal and eased the procedural delays in export by allowing His Majesty's Government to certify material content (50 percent). This was an opportunity, and in 1993 we began with major expansion. The renewal of the treaty in 1996 was another impetus. We purchased a local fruit juice factory and that was the beginning of Real juices, which are now the leading fruit juices in India. All the products sold there go from Nepal. This is one of South Asia's largest juice manufacturing units, with a capacity of 6,000 litres per hour.
How much, in total, have you invested in Nepal?
We have invested Rs 1.1 billion and now the annual turnover is around
Rs 2.6 billion, we are aiming at Rs 3 billion next year. We export about 92 percent of our products; local sales are about Rs 220 million. Investments made for the long term are beneficial to both company and the country as a whole.
What motivated you to come to Nepal?
Medicinal plants are widely available in Nepal. We not only collect them in the wild, we also plant them because we know they are a resource that will finish one day. We have a unique state-of-the-art greenhouse that produces three million saplings of medicinal plants and herbs every year. We are cultivating the saplings in 12 locations like Marpha, Manang, Jumla, Sindhupalchowk, Dolakha and in the tarai. We give farmers saplings with buy-back guarantee. We have also done well with chiraito, which even scientists said could not be raised in a greenhouse. Then there is the Taxus baccata. We have our own plantations on leased lands that grow over 800,000 saplings. In five-six years we may be collecting from our own plantations. We estimate we need about 10 million trees for that.
What happened to your saffron trials in Jumla?
We distributed 320,000 saffron bulbs in Jumla last year but we could stay there only for four or five months to oversee cultivation. We think that can do well in Jumla, Humla many other places. Marpha has been another good experiment. We grow medicinal herbs in between apple trees and as we care for the plants, the apple trees also benefit. Where on one plot the owner got 18 tons of apples before we began growing herbs, a year later he got about 30 tons. Last year the yield was 40 tons. We also took about half-a-dozen beehives there, which helped pollination.
Have you been affected by the recent spurt in violence?
Not very badly. Local projects are looked after by locals, our staff only make supervisory visits. In one place one of our staff members was beaten up. Jumla is badly affected. I think we haven't been attacked because everyone understands that what we are doing is good for the people and country. We've helped improve the socio-economic conditions of the farmers. In the Besisahar area you can see the change for yourself. The lives of the people have changed after we began collecting Taxus baccata leaves.
Nepal must be a major success story, even for Dabur.
Yes. It can be for anyone who wants to tap agro-forestry products and make long term investments. Our business is long-term, it has backward integration and involves farmers.
Are you planning more value addition in Nepal?
Frankly, we are hesitant. The benefits we get in many Indian states are now much better than those we get in Nepal. We were planning to make pineapple and tomato concentrate in Nepal. Last week we were approached by West Bengal state and given a unique package-capital subsidy of 25 percent, interest subsidy of 60 percent for seven years-and we have decided to take the plant to Siliguri. We decided to go there because of what they were giving us.
Government has to accept that companies like ours help the economic growth of Nepal. You get a sense the bureaucracy feels that industries just loot the country, motivated by profits. Well, everybody is motivated by profit: we purchase cheaper goods in the market and make a profit, even if it is only psychological. Profit isn't a bad word. Second, government should be willing to go out of its way to help any industry that wants to come here. All industries have a multiplier effect and boost the economy. There's another factor: we wanted some forest land, and we didn't get it. After waiting for many years, we are now thinking of shifting the plantations to India. I cannot wait forever.
How will the new Nepal-India treaty affect Dabur? Is Nepal still attractive to Indian investors?
We won't be affected. I think there's still room to invest here. If any industry says it cannot achieve 30 percent value addition, I think it is doing something wrong. People shouldn't worry about the value addition. On the matter of surge of the five items, we have the quota system. I feel canalisation has caused some problems and India must do something about it. Copper has been affected. The entire copper industry shouldn't be penalised. I think the Indian government will look into this.
So we still can do business in Nepal?
Yes, provided Nepal cleans up its house and makes the right policies. Now there's an export duty, the new industrial policy takes out tax holidays, there's also talk of freezing royalty payments. The basic problem here is that we make policies, laws and rules copying developed countries. We should make rules and regulations suitable for us.
Have the Indian quarantine rules been a problem for you?
Yes. We hope there will be at least two more checkpoints, in Birganj and one in Nepalganj. Now we have to send saplings all the way to Panitanki to send them to Indian markets. Saplings are very fragile and cannot survive such trips. Even within Nepal the logistics are difficult and we've been using helicopters to transfer saplings to planting areas.
